When Evaluating a Foreign Investment Project, It Is Important for the MNC

question 95

Multiple Choice

When evaluating a foreign investment project, it is important for the MNC to consider the effect of political risk, as a sovereign country can change "the rules of the game". To account for this

• A)the MNC may adjust the cost of capital upward.
• B)the MNC may lower the expected cash flows from the foreign project.
• C)the MNC may purchase insurance policies against the hazard of political risks.
• D)all of the above

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Definitions:

Cutoff

A predetermined point or limit beyond which something does not proceed or is not allowed.

Disengaged

lacking interest, involvement, or commitment; often used to describe students or employees who are not actively participating.

Rituals

Formalized actions performed in a customary way, often with symbolic meaning, such as religious ceremonies or family traditions.

Homeostasis

A state of equilibrium, balance, or lack of conflict.